January 2019

Loi Pinel : Advice on taxes building new house

Villa Speos, housebuilder in the Vaucluse, shares how to reduce taxes through the Pinel Law when building a new home

Tax breaks when building your new house in Avignon or Orange

While building a home is often associated with certain limitations which are hard to avoid, it also offers some appreciable advantages, including tax breaks.

Tax reductions under the Loi Pinel for building a new houseThe Pinel Law was passed in order to encourage residential building in zones that are known as “dense” (high demand due to insufficient housing at affordable prices). It applies to both individuals and couples buying new homes or those renovating existing residences for rental purposes. The major requirement for owners wishing to benefit from the tax reduction is to rent the property out for a minimum period of 6 years. The longer the rental period, the greater the tax break: 12% for the minimum period, 18% for 9 years and 21% for 12 years.

Where does the Pinel Law apply ?Please note that only certain geographical areas are eligible for this favourable tax scheme. They include zones A and Abis, including Paris, Lyon, Marseille and the Ile-de-France region around Paris. Zone B1 including Avignon, Sorgues, Orange and Carpentras, are also within its perimeter. Please contact us at Villa Speos to confirm whether you could benefit from the Loi Pinel in building your new house in the Grand Avignon area.

RequirementsThe tax benefits offered by the Loi Pinel only apply to eligible investors whose revenues do not exceed certain caps. For example, a single person in Orange or any other area of zone B1 may not earn more than 30,260 euros per year. This amount is raised respectively to 40,410 euros and 48,596 euros for a couple, or a couple with a single dependent. The property investment may not exceed 300,000 euros or 5,500 euros per square meter. Also note that the amount of rent is subject to a cap, depending on the location of the residence.